Harris Group, Inc. v. Robinson

• Citation: 209 P.3d 1188
• Decision Date: 05 March 2009
• Docket Number: No. 07CA1803.,07CA1803.
• Parties: HARRIS GROUP, INC., a Washington corporation, Plaintiff-Appellee and Cross-Appellant, v. Michael S. ROBINSON, Robert D. Courtney, Jon E. Neff, and Luminate, L.L.C., a Colorado limited liability company, Defendants-Appellants and Cross-Appellees.
• Court: Court of Appeals of Colorado

209 P.3d 1188

HARRIS GROUP, INC., a Washington corporation, Plaintiff-Appellee and Cross-Appellant, v. Michael S. ROBINSON, Robert D. Courtney, Jon E. Neff, and Luminate, L.L.C., a Colorado limited liability company, Defendants-Appellants and Cross-Appellees.

No. 07CA1803.

Colorado Court of Appeals, Div. VI.

March 5, 2009.

Rehearing Denied May 14, 2009.

Hale Friesen, LLP, Daniel E. Friesen, Peter J. Krumolz, Christine K. Lamb, Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant.

Appel & Lucas, P.C., Peter J. Lucas, Denver, Colorado, for Defendants-Appellants and Cross-Appellees Michael S. Robinson, Robert D. Courtney, and Jon E. Neff.

Rothgerber Johnson & Lyons, LLP, Michael D. Plachy, Alex C. Myers, Miro Kovacevic, Denver, Colorado, for Defendant-Appellant and Cross-Appellee Luminate, L.L.C.

Opinion by Judge BERNARD.

Defendants, Luminate, L.L.C. (the new business) and Michael S. Robinson, Jon E. Neff and Robert D. Courtney (the former employees), appeal the trial court's judgment entered on a jury verdict finding them liable to plaintiff, Harris Group, Inc. (the company), for breach of their confidentiality agreement, and for the torts of conversion, breach of fiduciary duty, and intentional interference with contract. The trial court also entered a judgment for damages for unjust enrichment, as recommended by the jury in its advisory verdict. We affirm the judgment in part, reverse it in part, and remand the case to the trial court for further proceedings consistent with this opinion.

I. Background

The company was an engineering firm with a department specializing in consulting with banks and other lenders that provide financing for the building of ethanol and power plants. The former employees worked in that department.

In early 2006, the former employees began to develop plans and make arrangements to open a new business. Over the course of several weeks, they took inventory of the company's clients and projects to determine which ones they would take with them when they resigned. They leased office space and obtained liability insurance.

The former employees copied the company's files, and e-mailed them or saved them so that the files could be used later at the new company. The original files were deleted after they were copied.

The former employees developed a website, which included the announcement that one of the former employees had left the company to join the new business, "tak[ing] along [the company's] entire ... Consulting Team." The former employee mentioned in the website announcement drafted another announcement to be sent to some of the company's clients, which stated, "[M]y entire consulting services team and I have spun off [from the company] and joined [the new business], a newly formed management and technical consulting firm."

Five days later, near the end of April 2006, the former employees resigned from the company, giving one day's notice. Upon their resignation from the company, the former employees extended job offers to five of the seven workers (the other employees) who remained in the financial consulting department. All five of the other employees accepted the offers, resigned from the company, and went to work for the new business.

During the new business's first week in early May 2006, the former employees contacted the company's clients. The former employees told the clients that they could arrange for the new business to take over their projects. They e-mailed the clients a form letter that they could use to terminate their business relationships with the company. Consequently, the clients transferred seventeen of twenty-nine active projects from the company to the new business.

In May 2006, the company filed suit against the new business, the former employees, and four of the five other employees. The suit sought relief for lost profits and damages, raising a variety of claims: computer fraud and abuse; conversion; civil theft; misappropriation of trade secrets; breach of confidentiality agreements; breach of fiduciary duty; defamation; intentional interference with contract; intentional interference with prospective business relations; civil conspiracy; fraud; and unjust enrichment. The other employees are not parties to this appeal.

Before trial, the company voluntarily dismissed the claims alleging that the former employees had engaged in computer fraud and abuse and had defamed the company. During the trial, the court entered a directed verdict in favor of the former employees on the company's claims of civil theft and misappropriation of trade secrets. The rest of the company's claims were submitted to the jury, and the trial court ordered that the verdict on the unjust enrichment claim would be advisory.

The jury found that the company had proved the following claims against the new business: intentional interference with a contract; conversion; and unjust enrichment. The verdict also found that the company had proved the following claims against the former employees: breach of confidentiality agreements; breach of fiduciary duty; intentional interference with contract; conversion; and unjust enrichment. The jury found that the company did not prove the claims of fraud; intentional interference with prospective business relations; and conspiracy.

The jury awarded the company $1,929,500 in actual damages assessed against the former employees and the new business, including an award of $205,000 as the advisory verdict for unjust enrichment. The jury also awarded the company $630,550 in punitive damages.

II. Instructions

The former employees and the new business contend that the trial court erroneously instructed the jury in two ways. First, the former employees and the new business argue that the instruction concerning the affirmative defense of the business competition privilege was misleading, circular, and prejudicial because it referred to wrongful means that (1) were not at issue in the case; (2) were rejected by the jury; and (3) included the same tort—intentional interference with a contract—to which the defense applied. Although we agree that the instruction was erroneous, we conclude that the error was harmless.

Second, the former employees and the new business contend that the instruction on punitive damages read and given to the jury omitted a part that had been approved during the instructions conference. Specifically, the instruction excluded a description of the purpose of punitive damages. Because the former employees and the new business did not raise this objection below, we shall not review it.

A. Standard of Review

Trial courts have discretion to determine the form and style of jury instructions. Williams v. Chrysler Ins. Co., 928 P.2d 1375, 1377 (Colo.App.1996). We will not overturn such a determination absent a showing of an abuse of that discretion. Id. A court's ruling on jury instructions is an abuse of discretion only when the ruling is manifestly arbitrary, unreasonable, or unfair. Id. (citing Hock v. N.Y. Life Ins. Co., 876 P.2d 1242, 1251 (Colo.1994)).

A court erroneously instructs the jury when the instruction at issue misleads or confuses the jury. Id. However, a court's erroneous instruction is reversible only when it prejudices a party's substantial rights. Id. If a jury probably would have decided a case differently if given a correct instruction, then the error is reversible. Webb v. Dessert Seed Co., 718 P.2d 1057, 1066-67 (Colo.1986). Thus, we apply a harmless error standard of review to a properly preserved objection to a jury instruction. Waneka v. Clyncke, 134 P.3d 492, 494 (Colo.App.2005), aff'd, 157 P.3d 1072 (Colo.2007).

C.R.C.P. 51 requires parties to object to alleged errors in instructions before they are given to the jury. "Only the grounds so specified shall be considered ... on appeal...." Id. Alleged errors that are not objected to are waived. Robinson v. City & County of Denver, 30 P.3d 677, 684 (Colo. App.2000).

The former employees and the new company argue that we should apply the plain error standard when reviewing the trial court's instruction on punitive damages. Although the "plain error" doctrine has been employed in a few civil cases involving instructional error, e.g., Blueflame Gas, Inc. v. Van Hoose, 679 P.2d 579, 586-87 (Colo.1984), the circumstances justifying its application in civil cases are rare. Robinson, 30 P.3d at 684-85. This is so because C.R.C.P. 51 warns counsel to raise objections to instructions; issues involving jury instructions, unlike some objections to evidence, do not arise without warning; a timely objection allows the court to correct errors that can be easily corrected; restricting the scope of plain error review in civil cases promotes orderliness and the finality of decisions; and trials, not appeals, are the core of the judicial system. Thus, plain error review of instructional issues is restricted to unusual or special cases, and, even then, reversal occurs only when necessary to avert unequivocal and manifest injustice. Id. For the reasons explained below, we decline to apply plain error review here.

B. Business Competition Privilege Instruction

1. Introduction

The tort of interference with existing or prospective contractual relations is an intentional tort. Restatement (Second) of Torts ch. 37 introductory note (1979) (the Special Note). According to Restatement section 767 comment a, this tort has three forms. Only one of these forms is at issue here, but we must discuss another form to provide an appropriate context for our analysis.

The first form occurs when a defendant causes a third party not to perform the terms of an existing contract with a plaintiff. It is defined by Restatement section 766:

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to...